National Heritage

National Heritage Financial Collapse and Sholam Weiss's involvement.

In late 1989 National Heritage Life Insurance Company (website) reported an operating loss and 27% reduction of capital from a decline of sales, and in 1990 insurance regulators threatened to shut down the company if it did not raise additional capital (see Anatomy of Failure by sally Whitner). A group of investors offered $4 million to satisfy regulators, in exchange for a controlling interest in National Heritage (See, NY Times article Aug 30,1998).  The group provided a $4 million check, but once in control of National Heritage, transferred $3 million from National Heritage to help cover the check. This began a long series of schemes in which millions were stolen from National Heritage by the group of investors. Bad investments further depleted National Heritage capital.

In 1993, the group decided to cover up all the missing money – about $35 million hole plus $10 million a total of $45  million (See  PSR, 16,17,18 ,19.) They reached out to Sholam Weiss as a financial consultant and told him they needed a way to cover “bad investments”.  He was unaware of the theft that caused the financial troubles.


Sholam ​Weiss agreed to have his company purchase discounted mortgages, with National Heritage funds, and rehabilitate them to increase their value. He also agreed to invest $20 million of his own assets in exchange for preferred stock in the company.   The discounted mortgages were eventually taken from Sholam Weiss’ and transfered it to the  officers of National Heritage, they then placed the mortgages into a mortgage-backed bond that was then placed on National Heritage books with inflated values in an attempt to cover up the $35 million hole.

In 1994, the Delaware Insurance Department did a full examination of the company and placed it in receivership. Three corporations and 13 individuals were convicted, including Sholam  Weiss.

The government never alleged that Sholam Weiss was aware of the theft by the investors and officers of National Heritage  until after he had purchased the the discounted mortgages, at which time the company took the mortgages from his control.

Sholam  Weiss sought to restore the financial health of National Heritage, and by so doing, make a large profit.  He never intended to do financial harm to the company.  And, in fact, evidence shows that the mortgages purchased by Sholam Weiss made a profit for the company, not a loss.

sholam weiss building